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DEPARTMENT OF FOREIGN AFFAIRS, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER NIEVES V.

DE CASTRO and JOSE C. MAGNAYI, respondents. DFA Office of Legal Affairs for petitioner. The Solicitor General for public respondent. Ronald E. Javier for private respondent. SYLLABUS 1. POLITICAL LAW; PUBLIC INTERNATIONAL LAW; SOVEREIGN IMMUNITY; EXTENDED TO ASIAN DEVELOPMENT BANK AS WELL AS TO ITS OFFICERS WITH RESPECT TO ALL ACTS PERFORMED BY THEM IN THEIR OFFICIAL CAPACITY; EXCEPTIONS. — The above stipulations of both the Charter and Headquarters Agreement should be able, nay well enough, to establish that, except in the specified cases of borrowing and guarantee operations, as well as the purchase, sale and underwriting of securities, the ADB enjoys immunity from legal process of every form. The Bank's officers, on their part, enjoy immunity in respect of all acts performed by them in their official capacity. The Charter and the Headquarters Agreement granting these immunities and privileges are treaty covenants and commitments voluntarily assumed by the Philippine government which must be respected. 2. ID.; ID.; ID.; THE COURTS ARE DUTY BOUND TO ACCEPT PLEA OF DIPLOMATIC IMMUNITY BY AN INTERNATIONAL ORGANIZATION; RECOGNIZED AND AFFIRMED BY THE EXECUTIVE BRANCH OF THE GOVERNMENT. — In World Health Organization vs. Aquino, we have declared: "It is a recognized principle of international law and under our system of separation of powers that diplomatic immunity is essentially a political question and courts should refuse to look beyond a determination by the executive branch of the government, and where the plea of diplomatic immunity is recognized and affirmed by the executive branch of the government . . . it is then the duty of the courts to accept the claim of immunity upon appropriate suggestion by the principal law officer of the government, . . . or other officer acting under his direction. Hence, in adherence to the settled principle that courts may not so exercise their jurisdiction . . . as to embarrass the executive arm of the government in conducting foreign relations, it is accepted doctrine that 'in such cases the judicial department of government follows the action of the political branch and will not embarrass the latter by assuming an antagonistic jurisdiction."' To the same effect is the decision in International Catholic Migration Commission vs. Calleja, which has similarly deemed the Memoranda of the Legal Adviser of the Department of Foreign Affairs to be "a categorical recognition by the Executive Branch of Government that ICMC . . . enjoy(s) immunities accorded to international organizations" and which determination must be held "conclusive upon the Courts in order not to embarrass a political department of Government." In the instant case, the filing of the petition by the DFA, in behalf of ADB, is itself an affirmance of the government's own recognition of ADB's immunity. 3. ID.; ID.; ID.; REASON FOR GRANTING THEREOF TO INTERNATIONAL ORGANIZATIONS. — Being an international organization that has been extended a diplomatic status, the ADB is independent of the municipal law. In Southeast Asian Fisheries Development Center vs. Acosta, the Court has cited with

5. be made a respondent in the Courts of another sovereign. . The logical question is whether the foreign state is engaged in the activity in the regular course of business. ACTS JURE IMPERII AND JURE GESTIONIS. In England. ID.. without its consent.. 4. the mere entering into a contract by a foreign state with a private party cannot be the ultimate test... the particular act or transaction must then be tested by its nature. viz: "In Public International Law. the immunity of the sovereign is recognized only with regard to public acts or acts jure imperii of a state.. but not with regard to private act or acts jure gestionis. — "There are two conflicting concepts of sovereign immunity. Certainly. Jr. . — The DFA's function includes. Hon. that it is immune from the legal writs and processes issued by the tribunals of the country where it is found. a determination which. it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is entitled to immunity. The obvious reason for this is that the subjection of such an organization to the authority of the local courts would afford a convenient medium thru which the host government may interfere in their operations or even influence or control its policies and decisions of the organization. ID. each widely held and firmly established. the parties thereto are deemed to have likewise accepted the responsibility of seeing to it that their agreements are duly regarded. such subjection to local jurisdiction would impair the capacity of such body to discharge its responsibilities impartially on behalf of its member-states. THE DEPARTMENT OF FOREIGN AFFAIRS IS IN CHARGE WITH THE DETERMINATION OF PERSONS AND INSTITUTIONS COVERED BY DIPLOMATIC IMMUNITIES. Rosario. only the Foreign Office . asks the Attorney General to submit to the court a 'suggestion' that the defendant is entitled to immunity.e. or an incident thereof... When international agreements are concluded. "In the United States. PROCEDURE IN INVOLVING IT. entitles it to seek relief from the court so as not to seriously impair the conduct of the country's foreign relations. In our country. this task falls principally on the DFA as being the highest executive department with the competence and authority to so act in this aspect of the international arena. If the foreign state is not engaged regularly in a business or trade..' where the foreign state or the international organization sued in an American court requests the Secretary of State to make a determination as to whether it is entitled to immunity. this Court has explained the matter in good detail. when challenged.approval the opinion of the then Minister of Justice. ID. If the act is in pursuit of a sovereign activity. ID. The DFA must be allowed to plead its case whenever necessary or advisable to enable it to help keep the credibility of the Philippine government before the international community.. then it is an act jure imperii. DISTINGUISHED. 6. . Such an act can only be the start of the inquiry. among its other mandates the determination of persons and institutions covered by diplomatic immunities. when a state or international agency wishes to plead sovereign or diplomatic immunity in a foreign court. besides. According to the classical or absolute theory. i. ID. ID. in turn. ID. thus — "One of the basic immunities of an international organization is immunity from local jurisdiction.." The service contracts referred to by private respondent have not been intended by the ADB for profit or gain but are official acts over which a waiver of immunity would not attach. According to the newer or restrictive theory. If the Secretary of State finds that the defendant is immune from suit. ID. ID. a sovereign cannot. a similar procedure is followed. — In Holy See vs. the procedure followed is the process of 'suggestion.. he. especially when it is not undertaken for gain or profit.

75 Phil. 7. 190 SCRA 130 (1990). 57 SCRA 1 (1974). Philippine-Ryukyus Command. or (b) where the order or decision is a patent nullity. S. the ADB and the DFA notified respondent Labor Arbiter that the ADB. which. the U. Forthwith. the Court has. the defense of sovereign immunity was submitted directly to the local courts by the respondents through their private counsels (Raquiza vs. his action that assumes otherwise would be a clear nullity. In the case at bench. 182 SCRA 644 [1990] and companion cases). In cases where the foreign states bypass the Foreign Office. under special circumstances. the courts can inquire into the facts and make their own determination as to the nature of the acts and transactions involved. The Court allowed the said Department to file its memorandum in support of petitioner's claim of sovereign immunity. the practice is for the foreign government or the international organization to first secure an executive endorsement of its claim of sovereign or diplomatic immunity. When an adjudicator is devoid of jurisdiction on a matter before him. On 27 January 1993. are the circumstances that can be said to obtain in the present case. In some cases. Zambales. one sent directly to the ADB and the other through the Department of Foreign Affairs ("DFA"). Two summonses were served. But how the Philippine Foreign Office conveys its endorsement to the courts varies. through the Office of Legal Affairs moved with this Court to be allowed to intervene on the side of petitioner. In International Catholic Migration Commission vs. 00-01-0690-93 for his alleged illegal dismissal by ADB and the latter's violation of the "labor-only" contracting law. In the Philippines. SPECIAL CIVIL ACTIONS. Note: Immunity from Suit of Foreign Sovereign Instrumentalities and Obligations. J p: The questions raised in the petition for certiorari are a few coincidental matters relative to the diplomatic immunity extended to the Asian Development Bank ("ADB"). in behalf of the Commander of the United States Naval Base at Olongapo City. Aquino. a 'suggestion' to respondent Judge. United States of America vs. CERTIORARI. as well as its President and Officers. Tizon. — Relative to the propriety of the extraordinary remedy of certiorari. 48 SCRA 242 (1972). Bradford. private respondent initiated NLRC-NCR Case No. In World Health Organization vs. SPEEDY AND ADEQUATE REMEDY IN ORDINARY COURSE OF LAW. 262 [1948]. guaranties or the sale of securities pursuant to Article 50(1) and Article . so allowed and entertained such a petition when (a) the questioned order or decision is issued in excess of or without jurisdiction. Guinto. 80 Phil. both with a copy of the complainant. the Secretary of Foreign Affairs sent the trial court a telegram to that effect. REMEDIAL LAW. Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make. DECISION VITUG.issues a certification to that effect instead of submitting a 'suggestion' (O'Connell. informing the latter that the respondent-employer could not be sued because it enjoyed diplomatic immunity. I International Law 130 [1965]. 50 [1945]. 50 Yale Law Journal 1088 [1941]). verily. In Baer vs. Miquiabas vs. CAN BE AVAILED OF ONLY WHEN THERE IS NO APPEAL NOR PLAIN. The Solicitor General embodied the 'suggestion' in a manifestation and memorandum as amicus curiae. the Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and Employment. the Department of Foreign Affairs. were covered by an immunity from legal process except for borrowings. Calleja.

the NLRC Chairman.00 (P4. or even question. "4. as cited in the letter of Secretary Padilla. The Labor Arbiter took cognizance of the complaint on the impression that the ADB had waived its diplomatic immunity from suit. the DFA referred the matter to the National Labor Relations Commission ("NLRC").500. including appeals to the appropriate division of the Commission and/or a petition for certiorari with the Supreme Court.55 of the Agreement Establishing the Asian Development Bank (the "Charter") in relation to Section 5 and Section 44 of the Agreement Between The Bank And The Government Of The Philippines Regarding The Bank's Headquarters (the "Headquarters Agreement"). To pay 10% attorney's fees of the total entitlements. 1993 in the amount of P42. including raising of defenses. dated 31 August 1993. on 03 November 1993. wrote: "The undersigned submits that the request for the 'investigation' of Labor Arbiter Nieves de Castro. the propriety of any decision by a Labor Arbiter. has been erroneously premised on Art. respondent Bank is hereby ordered: "1. "On the other hand. 1993. The defense of immunity could have been raised before the Labor Arbiter by a special appearance which. may not be considered as a waiver of the very defense being raised. 217 (on jurisdiction of Labor Arbiters and the Commission over labor cases). in its referral. by the National Labor Relations Commission. the Commission sits en banc (all fifteen Commissioners) only to promulgate rules of procedure or to formulate policies (Art.750. To pay complainant full backwages from December 1." Replying to the letter. considering that the provision deals with 'a question. and the termination of his services as illegal. in the adjudication of labor cases.00 x 9 months). naturally. under Rule 65 of the Rules of Court. 1992. that concluded: "WHEREFORE. Accordingly. including the Executive Labor Arbiters and Labor Arbiters' . In time. while the undersigned exercises 'administrative supervision over the Commission and its regional branches and all its personnel. Incidentally. Labor Code). "2. Instead. neither the Commission nor the undersigned may review. the DFA sought a "formal vacation of the void judgment. "3. To immediately reinstate the complainant to his former position effective September 16. is prescribed by law. matter or controversy within its (the Commission) jurisdiction' obviously referring to a labor dispute within the ambit of Art. Any decision thereafter is subject to legal remedies. 1992 to September 15. the Labor Arbiter rendered his decision. 218(c) of the Labor Code. 213. "The procedure." 1 The ADB did not appeal the decision. above premises considered. Except where an appeal is seasonably and properly made. And to pay complainants other benefits and without loss of seniority rights and other privileges and benefits due a regular employee of Asian Development Bank from the time he was terminated on December 31. judgment is hereby rendered declaring the complainant as a regular employee of respondent ADB.

" it became convinced that ADB. Section 44 of the agreement states: ." 4 Like provisions are found in the Headquarters Agreement. to guarantee obligations. with respect to certain officials of the bank. was correct in invoking its immunity from suit under the Charter and the Headquarters Agreement. The Office of the Solicitor General ("OSG"). "Thank you for your kind attention. "If the Department of Foreign Affairs feels that the action of Labor Arbiter Nieves de Castro constitutes misconduct. dated 07 April 1994. Art." 5 And. upon complaint properly made. that "after a thorough review of the case and the records. to guarantee obligations. he may cause that an investigation be made of any misconduct." 3 Under Article 55 thereof — "All Governors. 213. or to buy and sell or underwrite the sale of securities. officers and employees of the Bank. initially assailed the claim of immunity by the ADB. In a resolution. it submitted a Manifestation (dated 20 June 1994) stating. or to buy and sell or underwrite the sale of securities. Subsequently. alternates." 2 Dissatisfied. However. the Court issued the temporary restraining order prayed for. Petitioner was later constrained to make an application for a restraining order and/or writ of preliminary injunction following the issuance. on 16 March 1994. its Section 5 reads: "The Bank shall enjoy immunity from every form of legal process. the exercise of its powers to borrow money. or in connection with.(penultimate paragraph. among other things. The Court is of the same view. Directors. however. respondents were required to comment. he does not have the competence to investigate or review any decision of a Labor Arbiter. by the Labor Arbiter of a writ of execution. except when the Bank waives the immunity. except in cases arising out of. the DFA lodged the instant petition for certiorari. Article 50(1) of the Charter provides: "The Bank shall enjoy immunity from every form of legal process. Labor Code). on the purely administrative aspect of the decisionmaking process. Thus. In this Court's resolution of 31 January 1994. indeed. it is suggested that an appropriate complaint be lodged with the Office of the Ombudsman. including experts performing missions for the Bank: "(1) shall be immune from legal process with respect of acts performed by them in their official capacity. except in cases arising out of or in connection with the exercise of its powers to borrow money. in its comment of 26 May 1994. malfeasance or misfeasance. malfeasance or misfeasance.

. in behalf of ADB. and where the plea of diplomatic immunity is recognized and affirmed by the executive branch of the government. Hence." 8 To the same effect is the decision in International Catholic Migration Commission vs. Directors. . i. Being an international organization that has been extended a diplomatic status. nay well enough. the President." 6 The above stipulations of both the Charter and Headquarters Agreement should be able. the filing of the petition by the DFA. the ADB is independent of the municipal law. . . during their stay in the Republic of the Philippines in connection with their official duties with the Bank: "xxx xxx xxx "(b) Immunity from legal process of every kind in respect of words spoken or written and all acts done by them in their official capacity. 7 we have declared: "It is a recognized principle of international law and under our system of separation of powers that diplomatic immunity is essentially a political question and courts should refuse to look beyond a determination by the executive branch of the government. that it is immune from the legal writs and processes issued by the tribunals of the country where it is . as well as the purchase. Calleja. .e. on their part. 11 the Court has cited with approval the opinion 12 of the then Minister of Justice. sale and underwriting of securities. 9 which has similarly deemed the Memoranda of the Legal Adviser of the Department of Foreign Affairs to be "a categorical recognition by the Executive Branch of Government that ICMC . it is accepted doctrine that 'in such cases the judicial department of government follows the action of the political branch and will not embarrass the latter by assuming an antagonistic jurisdiction. in adherence to the settled principle that courts may not so exercise their jurisdiction . . or other officer acting under his direction. as to embarrass the executive arm of the government in conducting foreign relations. The Bank's officers. the ADB enjoys immunity from legal process of every form. other representatives of Members. 10 In Southeast Asian Fisheries Development Center vs. enjoy immunity in respect of all acts performed by them in their official capacity. thus — "One of the basic immunities of an international organization is immunity from local jurisdiction. enjoy(s) immunities accorded to international organizations" and which determination must be held "conclusive upon the Courts in order not to embarrass a political department of Government. . except in the specified cases of borrowing and guarantee operations. . In World Health Organization vs. is itself an affirmance of the government's own recognition of ADB's immunity. . Acosta." In the instant case.. The Charter and the Headquarters Agreement granting these immunities and privileges are treaty covenants and commitments voluntarily assumed by the Philippine government which must be respected. it is then the duty of the courts to accept the claim of immunity upon appropriate suggestion by the principal law officer of the government. Aquino."Governors. Vice-President and executive officers as may be agreed upon between the Government and the Bank shall enjoy. to establish that.

inter-alia. viz: "Dear Secretary Confesor. "I am writing to draw your attention to a case filed by a certain Jose C. but evidently to no avail. "In view of the fact that the Asian Development Bank (ADB) invokes its immunity which is sustained by the Department of Foreign Affairs. for the immunity of the Bank.M. in cases of borrowings. has advised the NLRC: "Respectfully returned to the Honorable Domingo B. besides. The obvious reason for this is that the subjection of such an organization to the authority of the local courts would afford a convenient medium thru which the host government may interfere in their operations or even influence or control its policies and decisions of the organization. Ms. for the reason stated in the Department's 1st Indorsement dated 23 March 1993. . Manila.. T. through the Office of Legal Affairs. the DFA." 13 Contrary to private respondent's assertion. (See Jenks. its President and officers from every form of legal process. Associated bank Bldg. let alone the negative implication of such a suit on the official relationship of the Philippine government with the ADB. Id. addressed a Notice of Resolution/Order to the Bank which brought it to the attention of the Department of Foreign Affairs on the ground that the service of such notice was in violation of the RP-ADB Headquarters Agreement which provided. pp. National Capital Region Arbitration Board (NLRC NCR Case No. Mabazza.. it has been invoked before the forum of origin through communications sent by petitioner and the ADB to the Labor Arbiter. Kimimasa Tarumizu. before the National Labor Relations Commission. a continuous hearing of this case erodes the credibility of the Philippine government before the international community. except only. In its communication of 27 May 1993. likewise. as well as before the NLRC following the rendition of the questioned judgment by the Labor Arbiter.found. guarantees or the sale of securities. which is self-explanatory. Arbitration Branch. National Capital Judicial Region.) "SIME D. (Sgd. 00-01690-93). Labor Arbitration Associate. HIDALGO Assistant Secretary" 14 The Office of the President. the Labor Arbiter charged with the case. Ermita. Kalaw St. copy attached. such subjection to local jurisdiction would impair the capacity of such body to discharge its responsibilities impartially on behalf of its member-states. 37–44). "For the Secretary of Foreign Affairs. the attached Notice of Hearing addressed to the Asian Development Bank. de Castro.. in connection with the aforestated case. Nieves V. "Last March 8. the claim of immunity is not here being raised for the first time. National Labor Relations Commission. has issued on 18 May 1993 a letter to the Secretary of Labor. Magnayi against the Asian Development Bank and its President.

"Very truly yours. 16 the Court has held: "There are two conflicting concepts of sovereign immunity.. Jr." 17 The service contracts referred to by private respondent have not been intended by the ADB for profit or gain but are official acts over which a waiver of immunity would not attach. "Perhaps you should point out to Labor Arbiter Nieves V.) JOSE B. without its consent. the labor arbiter in question persisted to send summons. If the foreign state is not engaged regularly in a business or trade. and whether or not petitioner has regarded the basic rule that certiorari can be availed of only when . especially when it is not undertaken for gain or profit. be made a respondent in the Courts of another sovereign. the particular act or transaction must then be tested by its nature. in turn. a sovereign cannot. SCRA 48. Hon. Such an act can only be the start of the inquiry. Such decision by the Supreme Court forms part of the law of the land. In the case of Holy See vs. each widely held and firmly established. by entering into service contracts with different private companies. de Castro that ignorance of the law is a ground for dismissal. then it is an act jure imperii. PCC-ADB" 15 Private respondent argues that. According to the classical or absolute theory. (Sgd. informed Labor Arbiter Nieves V. de Castro of this fact by letter dated March 22. or an incident thereof. copied to you. "The Supreme Court has long settled the matter of diplomatic immunities. ALEJANDRINO Chairman. the mere entering into a contract by a foreign state with a private party cannot be the ultimate test. the immunity of the sovereign is recognized only with regard to public acts or acts jure imperii of a state. "xxx xxx xxx "Certainly. In WHO vs. ADB has descended to the level of an ordinary party to a commercial transaction giving rise to a waiver of its immunity from suit. but not with regard to private act or acts jure gestionis. regarding the Magnayi case. Aquino. The logical question is whether the foreign state is engaged in the activity in the regular course of business. According to the newer or restrictive theory. If the act is in pursuit of a sovereign activity. it ruled that courts should respect diplomatic immunities of foreign officials recognized by the Philippine government. Rosario."The Department of Foreign Affairs. the latest dated May 4. herewith attached. "Despite this. With regard to the issue of whether or not the DFA has the legal standing to file the present petition.

Note: Immunity from Suit of Foreign Sovereign Instrumentalities and Obligations. Rosario. Calleja. The Solicitor General embodied the 'suggestion' in a manifestation and memorandum as amicus curiae. In England. . the practice is for the foreign government or the international organization to first secure an executive endorsement of its claim of sovereign or diplomatic immunity. In International Catholic Migration Commission vs. 48 SCRA 242 (1972). when a state or international agency wishes to plead sovereign or diplomatic immunity in a foreign court. the parties thereto are deemed to have likewise accepted the responsibility of seeing to it that their agreements are duly regarded. Aquino. The DFA's function includes. But how the Philippine Foreign Office conveys its endorsement to the courts varies.there is no appeal nor plain. "In the Philippines. he. this task falls principally on the DFA as being the highest executive department with the competence and authority to so act in this aspect of the international arena. Embassy asked the Secretary of Foreign Affairs to request the Solicitor General to make. The DFA must be allowed to plead its case whenever necessary or advisable to enable it to help keep the credibility of the Philippine government before the international community. If the Secretary of State finds that the defendant is immune from suit. we hold both in the affirmative.S. 190 SCRA 130 (1990). speedy and adequate remedy in the ordinary course of law. In World Health Organization vs. I International Law 130 [1965]. the procedure followed is the process of 'suggestion. in behalf of the Commander of the United States Naval Base at Olongapo City. Jr. the Secretary of Foreign Affairs just sent a letter directly to the Secretary of Labor and Employment. viz: "In Public International Law. informing the latter that the respondent-employer could not be sued because it enjoyed diplomatic immunity. a determination which. the determination of persons and institutions covered by diplomatic immunities. entitles it to seek relief from the court so as not to seriously impair the conduct of the country's foreign relations. "In the case at bench.' where the foreign state or the international organization sued in an American court requests the Secretary of State to make a determination as to whether it is entitled to immunity. 50 Yale Law Journal 1088 [1941]). only the Foreign Office issues a certification to that effect instead of submitting a 'suggestion' (O'Connell. 19 this Court has explained the matter in good detail.. "In the United States. 57 SCRA 1 (1974). asks the Attorney General to submit to the court a 'suggestion' that the defendant is entitled to immunity. Tizon. In our country. the U. 18 In Holy See vs. among its other mandates. a similar procedure is followed. The Court allowed the said Department to file its memorandum in support of petitioner's claim of sovereign immunity. a 'suggestion' to respondent Judge. when challenged. In Baer vs. Hon. the Secretary of Foreign Affairs sent the trial court a telegram to that effect. the Department of Foreign Affairs. it requests the Foreign Office of the state where it is sued to convey to the court that said defendant is entitled to immunity. Zambales. through the Office of Legal Affairs moved with this Court to be allowed to intervene on the side of petitioner. When international agreements are concluded. in turn.

concur. Guinto. the petition for certiorari is GRANTED. the defense of sovereign immunity was submitted directly to the local courts by the respondents through their private counsels (Raquiza vs. JJ.. In cases where the foreign states bypass the Foreign Office. Bellosillo... . Philippine-Ryukyus Command. are the circumstances that can be said to obtain in the present case." 20 Relative to the propriety of the extraordinary remedy of certiorari. 262 [1948]. so allowed and entertained such a petition when (a) the questioned order or decision is issued in excess of or without jurisdiction. Miquiabas vs. 182 SCRA 644 [1990] and companion cases). under special circumstances. 80 Phil. 50 [1945]. Padilla. 22 which. Bradford. The temporary restraining order issued by this Court on 07 April 1994 is hereby made permanent. 21 or (b) where the order or decision is a patent nullity. the Court has. Kapunan and Hermosisima Jr. 75 Phil. and the decision of the Labor Arbiter. verily. SO ORDERED. No costs. dated 31 August 1993 is VACATED for being NULL AND VOID. took no part. When an adjudicator is devoid of jurisdiction on a matter before him."In some cases. J. United States of America vs. the courts can inquire into the facts and make their own determination as to the nature of the acts and transactions involved. WHEREFORE. his action that assumes otherwise would be a clear nullity.